On October 8, 2026, the Michigan Attorney General, on behalf of the State and in its parens patriae authority on behalf of the people of Michigan, sued Blue Cross Blue Shield of Michigan (“BCBSM”) alleging federal and state antitrust violations and state claims of nuisance and unjust enrichment. The complaint alleges that BCBSM conspired with other insurance companies that make up the Blue Cross Blue Shield Association (the “Association”) to reduce competition and increase prices for insurance sold to national accounts and large group commercial accounts. The complaint also alleges that BCBSM exercised “monopsony” power as a purchaser of health care services to artificially depress prices for health care providers, leading to reduced staffing, closures and a degradation of the quality and availability of health care services throughout Michigan.
This lawsuit represents a frontal assault on the rules that govern the Association. It also directly challenges the most significant aspects of BCBSM’s business, alleging that it has acted unlawfully in selling insurance to national accounts and large group customers in Michigan and used its dominant position to unlawfully negotiate with health care providers.
The Complaint
While BCBSM is the only defendant, the complaint alleges that the Association and the other Blue Cross Blue Shield insurance companies (“Blue insurers”) are co-conspirators with BCBSM. The complaint focuses on the rules imposed by the Association. The Association holds the Blue Cross and Blue Shield trademarks and licenses those trademarks to Blue insurers, including BCBSM, to use in exclusive geographic territories. Under the Association’s rules, each insurance company that licenses the Blue Cross and Blue Shield trademarks agrees that it will have exclusive rights to the Blue brand within a designated geographic area and will not derive revenue from services under the Blue brand outside of its exclusive area.
The insurance companies that own the Association can also offer insurance outside of their designated territory without using the Blue brand, which the complaint terms “green” competition. The rules of the Association, however, limit the extent to which its owners can engage in green competition.
The Alleged Restraints
The complaint focuses on three rules of the Association, which it claims constitute an unlawful agreement:
- Exclusive Service Areas. The Association assigns each Blue insurer an exclusive territory. And for “national accounts,” which are employers with 5,000 or more members spread across two states, with limited exceptions, only the Blue insurer in the territory in which a national account is headquartered can bid to offer insurance to the national account.
- The National Best Efforts Rule. The National Best Efforts Rule requires a Blue insurer to derive at least two-thirds of its net revenue attributable to health care plans and related services from its Blue brand. Although the rule was formally rescinded by the Association after a court found the rule to be anticompetitive in 2021, the complaint alleges that Blue insurers continue to abide by it and it remains in place “de facto.”
- The Local Best Efforts Rule. The Local Best Efforts Rule requires that 80% of the revenue received by a Blue insurer from within its allocated territory come from the sale of services using the Blue brand. The complaint alleges that this rule inhibits BCBSM and other Blue insurers from developing competing brands that might otherwise engage in “green” competition.
The complaint alleges that these rules have allowed Blue insurers to artificially restrict competition for national account customers, leading to higher prices and lower quality services.
BCBSM’s Dominance
The complaint also focuses on BCBSM’s dominance in Michigan. According to the complaint, BCBSM holds a 69% share of the large group market in Michigan. BCBSM also holds a 65% share of all health insurance products in Michigan and a 79% share of the Preferred Provider Organization products in Michigan, making it the dominant commercial purchaser of health care services in Michigan.
In the large group market, the complaint alleges that BCBSM has unlawfully abused its monopoly power under Section 2 of the Sherman Act and analogous Michigan law. The complaint alleges that the unlawful restraints described above have shielded BCBSM from competition and allowed it to maintain its monopoly. The result of its monopoly is inflated premiums and fees for large group accounts.
Similarly, the complaint alleges that BCBSM has abused its position as a dominant purchaser of health care services, in violation of Michigan state antitrust law. The result of this exercise of “monopsony” power—that is, monopoly power as a purchaser—has been to suppress provider reimbursement rates to anticompetitively low levels. According to the complaint, BCBSM can dictate the fee schedules that providers must accept, as providers cannot afford to be out of network with BCBSM. Further, the complaint alleges that BCBSM’s rates act as a benchmark for other commercial insurers, exerting downward pressure on all commercial rates for Michigan health care providers. This has led to reimbursement rates for providers that are among the lowest in the nation and terms that providers must accept which are favorable to BCBSM.
The result of BCBSM’s low provider rates and restrictive terms is a “degraded . . . healthcare infrastructure” for Michigan residents. This includes closures, service reductions and provider departures, which have led to “reduced access to care, increased wait times, and diminished the quality of healthcare services available to Michigan patients.” The results are allegedly particularly acute in rural areas, low-income communities and communities of color.
Practical Takeaways
- The Association is in the crosshairs. The complaint concentrates on the exclusive territories assigned by the Association, which is the model by which Blue insurers have organized themselves. The outcome of the litigation could thus have consequences that extend beyond Michigan.
- High market shares continue to attract antitrust scrutiny. BCBSM’s alleged market shares are significant, and commercial insurance markets in Michigan are allegedly more concentrated than in many other areas. BCBSM has previously attracted the attention of antitrust regulators, and that scrutiny continues with this lawsuit. The monopoly claims against Blue Cross are facially more viable than they would be against insurers in other areas that have lower market shares.
- Low prices can form the basis of antitrust complaints. Generally, low prices are favored by antitrust law. But antitrust law has long acknowledged that the exercise of “monopsony” power can be unlawful. The complaint alleges the ways in which unlawful buyer power can ultimately harm consumers and, in this case, patients. Michigan will likely need to establish those harms to ultimately prevail on its claim that BCBSM has abused its market power to harm providers.
- Providers may become the subject of third-party discovery. Because one of the theories in the complaint focuses on the harm that BCBSM has caused to health care providers in Michigan, these providers are likely to become the subject of third-party discovery once discovery opens. This could include third-party document or deposition subpoenas.
- This is likely the start of a long process. Antitrust cases—and particularly cases focusing on monopolization—can often take years to play out. The complaint likely marks the start of extended litigation.
If you have any questions or would like additional information about this topic, please contact one of the following members of Hall Render’s Antitrust Practice:
- William Berlin at (202) 370-9582 or wberlin@hallrender.com;
- Michael Greer at (317) 977-1493 or mgreer@hallrender.com;
- David Stoltzfus at (202) 780-2991 or dstoltzfus@hallrender.com;
- John Bowen at (317) 429-3629 or jbowen@hallrender.com;
- Hannah Clarke at (317) 429-3615 or hclarke@hallrender.com;
- Liza Sawyer at (303) 557-2120 or lsawyer@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot, outside of an attorney-client relationship, answer specific questions that would constitute legal advice.
